Washington, 13 September 1996 (RFE/RL) - The International Monetary Fund (IMF) says that the $10.1 billion extended loan it approved for Russia last March pushed the IMF's financial support to member countries to an unprecedented high in the financial year which ended April 30.
The fund, in its annual report released today in Washington, says that the three-year Russian loan was the largest of its type ever for the IMF and, combined with major loans to Mexico and Argentina, expanded its commitments for the year to $26 billion. That's well above the previous year's $22 billion.
The IMF's First Deputy Managing Director, Stanley Fischer, says that this "heavy demand" on the fund's resources for the second year in a row has reduced the IMF's liquid reserves and prompted the Board of Executive Directors to push ahead on seeking a doubling of member nation's quotas, or membership fees.
An increase in the quotas, long advocated by many nations but opposed by the United States, is expected to be a major topic of discussion at the fund and World Bank annual meetings later this month in Washington.
Any such increase would have to be approved by at least 85 percent of the IMF's member nations. Each member would then have to seek legislative approval at home to raise the money required. The process normally takes several years to complete.
In addition, Fischer says there has been basic agreement among at least 24 countries to expand the General Agreement to Borrow (GAB). This is a side fund upon which the IMF can, with the approval of the offering countries, draw upon in emergencies. For years, the GAB was supported by 12 of the richest countries, but it is now being expanded to others and raised to total about $50,000 million.
Fischer says the 1996 fiscal year -- from May 1 1995 to April 30, 1996 -- was a "busy" one for the IMF, with improved surveillance of all members' economic situations, increased review of general world conditions, and quicker response to developing problems.
The fund now does annual reviews of almost every member nation, and in the last financial year examined 21 of the nations in Central and Eastern Europe and the former Soviet Union.
The annual report says that in general, the countries of Central and Eastern Europe and the Baltic states had improved economies, with reduced inflation and liberalized trade and payments systems.
However, it notes, progress in structural reforms was "mixed." In particular, says the report, "fragile banking systems and financial indiscipline had been a major source of macroeconomic instability in some countries." It pointed to the slow pace of banking reforms in Latvia and Lithuania, and bogged down privatization efforts in Slovakia and Slovenia as examples.
For the countries of the former Soviet Union, the fund's report says they generally made "determined efforts" at stabilization and market-oriented reforms, but that progress was often slow and uneven. It says the "fiscal situation" in most remains fragile.
It says that the fund's directors, in checking these reviews, stressed that "successful macroeconomic stabilization needed to be supported by strong and stepped-up progress in structural reforms." IMF officials say this means that while fighting inflation, for example, is a major priority, doing so without paying attention to all the other reform requirements will not bring success.
It urged that the nations of the ex-U.S.S.R. step up reforms of their banking sectors and accelerate the pace of enterprise restructuring and privatization.
Fisher told reporters that the directors do hope to push for an allocation of the IMF's own money, the SDR (Special Drawing Rights), to countries which never got one. This impacts mostly the former communist countries which joined the fund in recent years. The fund's original members in the 1940s each received an allocation of SDRs, but there were none left to give new members.
Fisher says it would entail creating around 30,000 million new SDRs, valued at around $45,000 million. He says this "equity allocation" will be discussed again at the annual meetings at the end of September.